Toshiba to Buy Landis+Gyr for $2.3 Billion for Smart Grids

May 19, 2011, 7:05 AM EDT By Pavel Alpeyev

(Updates with major shareholders in fifth paragraph.)

May 19 (Bloomberg) -- Toshiba Corp., Japan’s biggest maker of nuclear reactors, agreed to buy Swiss electronic-metering company Landis+Gyr AG for $2.3 billion in cash and assumed debt to bolster its smart-grid operations.

The sale will probably be completed in the three months to Sept. 30, pending regulatory approvals, the companies said in a statement today. Hiroki Yamazaki, a Tokyo-based spokesman for Toshiba, declined to specify the breakdown of the debt assumed.

The purchase, Toshiba’s biggest since its Westinghouse Electric acquisition five years ago, would give the Japanese company access to Landis+Gyr’s customers across 30 markets as countries including the U.S. upgrade their electrical systems. The global smart-grid market may surge sixfold to 5.8 trillion yen ($71 billion) over the next decade, according to Toshiba.

Toshiba fell 3.4 percent to close at 431 yen on the Tokyo Stock Exchange, compared with a 0.4 percent decline in the benchmark Nikkei 225 Stock Average. The stock has lost 2.5 percent this year.

Credit Suisse Group AG and Lazard Ltd. advised closely-held Landis+Gyr, while Deutsche Bank AG and Goldman Sachs Group Inc. advised the Swiss company’s shareholders, including Allianz Capital Partners and Australian Capital Equity, according to the statement.

Smart Meters

Founded in 1896, Zug, Switzerland-based Landis+Gyr makes so-called smart meters that allow utilities to check energy use remotely and can be connected to equipment that shows customers when rates are highest. Its clients include E.ON AG, Centrica Plc’s British Gas unit and PG&E Corp.

Smart-grid systems monitor electricity usage to regulate it more efficiently and to manage fluctuations in supply from renewable sources such as wind and solar power. The networks reduce reliance on a centralized energy source, better handling spikes in demand and reducing the likelihood of power disruptions.

In January, Landis+Gyr was chosen by State Grid Corp. of China to help build the world’s largest smart grid, agreeing to supply more than 10,000 commercial and industrial advanced electricity meters in six Chinese provinces.

Toshiba, which makes power-generating equipment including nuclear reactors, is expecting sales of 700 billion yen from smart-grid and “smart communications” businesses, the company said last year.

--Editors: Young-Sam Cho, Anand Krishnamoorthy

To contact the reporter on this story: Pavel Alpeyev in Tokyo at palpeyev@bloomberg.net

To contact the editor responsible for this story: Young-Sam Cho at ycho2@bloomberg.net

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